have to purchase extra rationing coupons in the marketplace, and those coupons would command a price. But the price of gasoline at service stations would remain approximately the same, and therefore the higher price of gasoline to those who consume more than their allotment would not get into the consumer price index and hence would not trigger automatic increases in wages and other payments-such as social security-that are linked to the Consumer Price Index. Moreover, rationing would be less likely to lead to higher wage and salary settlements than would a tax that is passed into higher prices. At the present time I regard this as the most important reason for favoring rationing over petroleum taxes. The man in the street does not distinguish between price increases due to shortages, price increases due to higher profits, and price increases due to higher excise taxes. He will simply try to recoup price increases, especially those reflected in the Consumer Price Index, with higher wage demands. A tax on petroleum products would aggravate the inflationary tensions that are already great in our economy. For the same reason, combined with my view that the long-run supply price of energy is lower than present OPEC-determined oil prices, I would not remove price controls on old oil at the present time. Eventually we must restore a uniform price for domestically produced oil, but simple removal of price controls is not the best way to do it. This emphasis on price consideration is reinforced if the rationing is imposed on gasoline alone rather than other petroleum products. A tax on all petroleum products will increase energy costs throughout industry and will, therefore, provide occasion for raising prices of many other goods. A tax on gasoline alone, or rationing of gasoline alone, would fall primarily on end users, and for this reason, too, the inflationary impetus would be less per barrel saved than it would be under the administration's proposal. Third, I believe that a rationing program would be more equitable and would be perceived to be more equitable by the American public than a tax program. The standard argument runs that high-income people can afford the tax whereas poor people cannot. This is oversimplified but there is, nonetheless, a basic truth in it. Any desired. result with respect to equity can, of course, be achieved through the tax rebates that the administration promises. But we have not seen what they are, and in the absence of a very careful and probably complex rebate scheme, I believe considerations of equity are better served by a simple rationing scheme based on all licensed drivers, combined with a free market in rationing coupons, and a provision for special allotments in really exceptional cases. Finally, I believe that rationing would be much more effective symbolically than higher taxes. In terms of expressing our seriousness of purposes, rationing has more bite to it per barrel of petroleum saved. Since a large part of the reason for having a conservation program rests precisely on conveying to the rest of the world our seriousness of purpose, this argues strongly for preferring a rationing scheme over higher taxes. To save 1 million barrels a day this country would have to cut its to do either through rationing or through taxes, but I believe the target is a tolerable one and the degree of inconvenience it would impose is not so great that the idea of having a conservation program should be abandoned. But the administration's proposed timing and technique for achieving this target would work too great a hardship on the American public for the relatively small gains that would re sult. The CHAIRMAN. Thank you, Dr. Cooper. The Chair would like to state, if there is no disagreement, we will follow the 5-minute rule. I will defer my time now to Senator Randolph. He has a committee he has to chair and must leave. So I will call on him first. Senator RANDOLPH. Mr. Chairman, I am appreciative of your consideration, and I thank you, and also those who are working here today for giving me the opportunity of proceeding before members of your committee. I would like the attention of all of the members of the panel. You have all said in essence-some in stronger language than others that you believe in energy conservation. The word massive has been used. An energy conservation program massive in nature. I believe that very much, but I don't believe we have tapped the surface of how the American people can conserve energy. I wish to draw our attention to what has been done under section 22 of Public Law 93-275. That is the legislation which established the Federal Energy Administration. As you, Mr. Chairman, recall, that statute required submission to the Congress and the President of a comprehensive energy plan for the period through June 30, 1976. This report was submitted last year on December 9, by you, Dr. Sawhill, as one of the last acts of your administration. It was submitted to Senator Jackson and members of the Interior Committee and those of us on the task force. At that time you indicated that we could have a near term program of energy conservation that would achieve a total savings of 1 million barrels per day. Is that correct? Dr. SAWHILL. Yes, sir. I believe so. Senator RANDOLPH. Your evaluation was broken down into segments. I must conserve my questions within the 5 minutes, but I ask unanimous consent to place this in the record. The CHAIRMAN. Without objection, the entire table will be inserted. [The table follows:] FEA Energy Program-December 9, 1974 Near term program: Auto fuel economy (1975 model yr. gains). 55 mile/hour limit enforcement--- Encourage car tuning and tire inflation__. Encourage carpooling---- Encourage activity and route coordination__. 175 58 50 7 5 40 130 Senator RANDOLPH. I call to your attention that in the industrial sector savings, you estimated that in 1975 we could save 175,000 barrels a day. You also estimated in transportation we could save 290,000 barrels a day. We are talking about fuel economy. We are talking Then we come to another category which is buildings. Modified ventilation in commercial buildings, insulation, and so forth and so on. A total savings in 1975 of 345,000 barrels per day. While thinking of the heating, I carry this thermometer with me, and it is now 810 in this room. The lights add somewhat to this, but all over the Capitol we are running 10° to 12° more than we need for the comfort of the persons who are in the rooms. So frankly, the Members of the Congress must stop talking about this subject, and they must see that the heat in the buildings here on the Hill is reduced. I have directed a strong letter to the Architect of the Capitol, hoping he will take the initiative in these matters. This is not a little matter. This is a very important matter. Throughout the country this is being done to a greater degree than we are doing here within Washington, D.C., within the buildings of the Federal Government. Then we come to fuel substitution, which was a further category. Fuel conversion of utilities was established at 115,000 barrels a day. At this point, I ask you, Mr. Sawhill, to refresh your thinking back to June of last year, after the Congress had passed the Coal Conversion Act and it was signed into law. Now 9 months later we are just beginning to get guidelines or whatever we desire to call them. The other day I asked Secretary Morton and Administrator Zarb what was being done. They conferred, and I am not critical of them, but they were not sure. Can you, as the man who was in charge during those months, tell us what has been done in this conversion program, which would save 115,000 barrels of oil a day? Dr. SAWHILL. That certainly is an important program, Senator Randolph, and immediately after the passage of the act, what we did at FEA was to take a sample of 10 or 15 utilities-I can't remember which and use them as a pilot test group for determining how best to develop the regulations. It was my understanding the regulations were to have been developed by December 15, and orders made under the act according to the regulations, in January. Senator RANDOLPH. You mean it takes 8 months to move on a matter of this kind? Dr. SAWIIILL. It took some time because we had to go through a testing procedure with a smaller group of utilities before we felt we were in a position to promulgate regulations nationwide. Senator RANDOLPH. I am disappointed. I am discouraged. I think the American people are discouraged by the delay. I am not attempting to attribute it to any one person within the agency. But let's hope it doesn't take as long to enact the legislation we are talking about today. The CHAIRMAN. Your time is up. Senator RANDOLPH. May I take 1 more minute. I don't ask for this very often. I will ask today. Now, the draft regulations, they were actually promulgated within the last 2 or 3 days. Now we are going to add some 3 months for comment on the environmental impacts. All I am saying is that if we pass a law and it takes us a full year and over to begin to see any results of it, Dr. SAWHILL. I think both the executive and legislative mills have ground too slowly in this instance. Senator RANDOLPH. It is not because action has not been taken on legislative packages. Now, that was millions of barrels of oil per day. Yet in your testimony-and I regard you very, very highly-you are not an economist who is always right but seldom in doubt-you are very often right. But today you come in and change this figure. You say, the economy has changed. But I am talking about the wasteful consumption problems that give us the opportunity to do a little job of conservation in this country. I am not in school, but will you raise your hands, all of you who are on the panel, do you really believe we can do a conservation job in America on a voluntary basis and save tremendous amounts of petroleum every 24 hours if we level with the American public and actually call a crusade into being to do the job? If there are any hands, I would appreciate it. One, two. [Dr. Cooper, Dr. Janeway.] Senator RANDOLPH. I was in the minority again. Well, that is all right. [The letter to the Architect of the Capitol referred to by Senator Randolph follows:] Mr. GEORGE M. WHITE, FEBRUARY 18, 1975. DEAR MR. WHITE: Energy conservation affords an opportunity to foster energy independence. Significant energy savings are possible through improvements in the operation and maintenance of buildings such as the offices in the Capital and in both the Senate and House of Representatives. In the spirit of Senate Resolution 59, approved by the Senate on February 5, 1975, it is incumbent upon government to demonstrate the energy savings that are possible through voluntary actions. In this regard, the Congress should institute all available actions to reduce energy consumption without reducing the level of essential services. This letter is to request your office to survey the potential energy savings that can be achieved in the Capital buildings through a positive energy conservation program. During the last few weeks I have observed that room temperatures in the Capitol buildings are often significantly in excess of the recommended 68 degrees, ranging up to as high as 80 or 81 degrees. This is one opportunity for improvement. Other opportunities also exist. Your assistance is requested in providing a report to the Committee proposing an energy conservation program for the Capital facilities. With regards, I am, Truly, JENNINGS RANDOLPH, Chairman. The CHAIRMAN. Thank you very much. Senator Hansen. Senator HANSEN. Thank you very much, Mr. Chairman, I came in late so let me yield to others ahead of me. The CHAIRMAN. Maybe I will take 5 minutes. We have a physicist over here who will keep the time and so it should be accurate. I wonder if we could nail down one thing that is very confusing, I think, to those of us trying to follow it, let alone the public. But the administration talks about a $31 billion program. That is the import tax, the excise tax, the decontrol of oil and so on, including as I under stand it, the ripple effect. |